Tom Stemberg founded Staples in 1986 after being let go by a supermarket chain. He saw how office supply needs were being filled by mom-and-pop stores and thought there had to be a better way. After building Staples into a $19 billion company, he now serves as Managing General Partner of the Highland Consumer Fund which focuses on investing in retail and consumer services companies. He currently serves on the boards of CarMax, Inc., Guitar Center, lululemon athletica, PetSmart, Inc., and Pharmaca.

Tom recently took time to answer questions about entrepreneurship from PLACES.

Q:   What personal attributes makes someone a good retail entrepreneur?

TS:  The biggest difference between entrepreneurs, especially retail entrepreneurs, is that we view every challenge as an opportunity, as well as a barrier others will have difficulty surmounting.

And we can always see the light at the end of the tunnel, even if it is a train coming the other way!

Q:   How is retail entrepreneurship different from starting other types of businesses?

TS:  The challenge one has starting a retail business is that it consumes a great deal more capital than a software or medical device start-up. You need inventory, fixtures, systems, not to speak of a considerable amount of overhead to get a store off the ground. You then need countless more stores that have reached profitability to cover your overhead. The other businesses often require little more than an office and a few PCs.

Q:   What advice would you give to someone who does not have retail experience but has an idea for a retail business?

TS:  Keep your day job: retail is way tougher than it looks.

Q:   What should landlords do to help start-up retailers succeed?

TS:  This magazine is not long enough for my answer, tsk. Treat them with respect. It is the exciting innovators who can make your development special. Do the landlords who took credit risk to sign up lululemon and Pinkberry in their early days regret it today?

Q:   What are the biggest challenges when expanding from one store to multiple stores?

TS: The toughest challenge — and there are many — to building a retail business from one to many stores is attracting and retaining great people. When we look at investing in these companies, which we do for a living at the Highland Consumer Fund, this is a primary focus. One can hire a new CEO but it is much tougher to replace a dozen store managers and store teams!

Q:   In your view, what types of retail concepts have the greatest growth potential right now?

TS: In the short term, economic challenges will favor deep discount concepts like dollar stores and grocery hard discounters; this will rapidly change as the economy recovers. America and the world are becoming more fragmented both in terms of demographics and taste. The winners will be concepts that serve the needs of particular segments very well. That is why we are excited about investments like Pharmaca — an integrative pharmacy that offers both traditional and holistic remedies — and City Sports, which offers the city-dwelling athlete everything he or she needs in apparel and gear. P